By John Gruetzner*
Canada needs to act quickly to protect the viability of its commodity export industries. For the cost of one submarine, the Carney government can deliver a /private sector partnership under what I would like to name Project Bluenose to address two maritime voids in Canada’s economic security. The first is the relatively insufficient number of ocean-going cargo freighters currently under Canadian control. The second, as exposed in the BC Ferries procurement is the low level of capacity to build civilian ships in Canada.
BC Ferries’ decision to purchase new boats from China exposed Canada’s extremely low level of domestic shipbuilding capacity. It did not, however, expose that Canada’s economic security is quite vulnerable due to a lack of Canadian control over or ownership of bulk freighters, oil tankers, and LNG transport ships.
Western Canada’s production and export of grain, potash, forest products, oil and gas, and mining production all rely on ocean transportation to reach global markets. A critical component of trade diversification will require Canada to control its own destiny at sea. Maritime capacity has been understood since 1890 with the publication of Alfred Thayer Mahan’s book The Influence of Sea Power upon History. This importance is well understood by China and the United States in military terms but was forgotten by the United States in the commercial shipping sector.
City Age recently launched a national campaign to promote the economic value of the shore-based economy that services the blue economy of the oceans. Canada has the worlds longest coastline but suffers from focusing primarily on its land-based economy and sub-contracting its maritime security.
This oversight will start to come to the forefront on October 14th when the new mesures announced by the Trump administration charging ships built in China a fee per ton for access to American ports go into effect. The goal of these fees is to stimulate the construction of cargo ships again in the United States.
President Trump’s concern is China’s ship industry dominant share of global shipbuilding, which reached over fifty five percentin terms of deadweight tonnage (dwt) and even higher,seventy four percent, in terms of new orders in 2024.
Charging Chinese built ships port access fees will potentially create blowback that impacts shipping costs, or even the number of ships that will call Canadian ports. This is because Chinese built, or owned ships may not find it economically viable to visit North America.
Potential shortage of ships to carry Canadian commodity exports
In the worse case scenario, it will create a shortage of ships to carry Canadian exports to global markets. This will also force Canadian commodity shipments to the United States to use vessels not made in China to control costs.
China’s exports as a counterbalance to the tariffs put on its exports to the United States are aggressively shifting further towards South America, ASEAN, India, and Africa.
The expanding volumes of trade between China and these regions will make it harder to count on Chinese owned cargo ships to service Canadian ports.
To protect Canada’s economic security, especially in all the four western provinces, the Carney government must commit now to a /private sector partnership to grow a merchant marine by securing operational control over existing but also building new bulk freighters in Canada.
The funds can be categorized as defense spending and budget neutral if the submarine program is scaled back. A hard choice for the government will be a hard but also deliberate decision to build a single ship building cluster either on the west or east coast. Ottawa on both sides of Parliament must stop looking at regional allocation of state resources for political reasons as its primary incentive and invest behind global centers of sustainable excellence. The location can be decided through a competitive bidding process that factors in private sector, provincial support and existing capacity. An integral part of the program must be job training.
Proposed Project Bluenose
A three-stage plan is required for Project Bluenose which should be tendered to the private sector. Bluenose is chosen as the project name out of respect for Canada’s historic prowess as a shipbuilder.
The first stage must include the funding of Canada’s shipping companies to acquire ships that are already in service. The ownership and operations could be led by existing private sector ship operators. British Columbia and the Maritimes should incentivise offshore shipping companies to move their headquarters to Canada.
The second stage might include, after an economic and environmental assessment, funding a modern, safe, and environmentally leading-edge location to decommission old ships. This decommissioning operation must be competitive to attract global business. This will lay the basis for the infrastructure and training required to restore Canada’s maritime sector. There is already a proposal to do this in Port Alberni; but if deemed viable should be close to the shipbuilding cluster.
The third stage should be for the federal government to commit financially to support the building through grants and loans to fund, starting in 2027 or 2028, a fifteen-year program of procurement by ocean and lake freighter shipyards in Canada. A test for the success of this program will be successfully winning future bids put out by BC Ferries and ship contracts with other countries.
This building program should include existing domestic and international partners in the ship building sector. It should, however, commit to having a leading position in the deployment of software and robotics in the design and construction work.
The Green or Zero Net Carbon ships propulsion should be powered by variety of existing and under development technologies. There should be a deliberate commitment to collaborate with sub-suppliers in Canada and the United States.
Canada has already formed a Digital Supercluster, Next Generation Manufacturing Canada, and an Ocean Supercluster so there is no need to create a project specific Ship Cluster. The government’s primary role should be limited to creating a financial guarantee to build a minimum number of ships each year.
The government should also seek buyers in parallel with these guarantees.
A failure to protect Canada’s economic security through the current policy focus in Ottawa on expanding port capacity without having secure access to ships is tantamount to buying a pinball machine with no balls…
